1. Field of the Invention
The present invention relates to trading of media space and, more specifically, to an online system for trading advertisements.
2. Description of the Related Art
Historically, revenues generated from selling media space for advertising have represented an important source of income for media companies. Television and radio stations as well as many Web sites rely almost exclusively on advertising revenue to fund the cost of their operations so that they may provide programming and content free of charge to the general public. Similarly, general-interest newspapers and magazines depend on advertising revenues to subsidize their cost of operations, allowing them to offer their publications to the public at low prices or free of charge.
In recent years, the forums for advertising have become as creative as they are ubiquitous: from banners on the sides of buses to stickers on peels of fruit. Advertising now represents a key component of many economies. For example, in the U.S., advertising expenditures represented 2.2% of the 1999 GDP; this figure is predicted to rise to 3% by 2010.
Currently, there are four primary models or arrangements under which traditional media space (i.e., non-interactive) is traded. In a first arrangement, a corporation wishing to advertise hires the services of an advertising agency, which buys space directly from media firms on behalf of its client. According to a second arrangement, the advertising agency purchases ad space through third party agents, which act on behalf of the media firms. Less common than the first arrangement yet more common than the second is a third arrangement in which the advertiser negotiates and purchases media space directly from the media firms. Finally, the least common arrangement by which the advertiser negotiates and purchases media space from third party agents, which act on behalf of the media firms.
Existing systems and methods for buying and selling non-interactive media space are generally inefficient, in terms of time, human and capital resources employed. They are oftentimes ineffective in that they produce sub-optimal results or waste unsold inventory. The reasons for this relate to the fragmented structure of the industry: With thousands of geographically dispersed buyers and sellers, the customized nature of such transactions necessitates lengthy periods for contract negotiation and market discovery.
Related to this is the fact that the metrics by which traders determine the value of non interactive media space are of questionable statistical significance and can be a subject of dispute, thereby hindering the commoditization of media space and the efficiency of trading. Additionally, due to the inefficiencies described above, trading in noninteractive media is generally conducted well-before scheduled placement, relying on metrics that are dated and often inaccurate by the time the advertisements appear.
There have been attempts to provide technological solutions to facilitate more efficient and effective trading and placement of interactive media. A common prior art method collects information on the numbers and demographic characteristics of users of contracted interactive media sites, matches this information to user profiles, which the advertiser seeks to target, and then provides advertisements to the various sites. Another method aimed at traditional media typically offers advertisers access to an integrated catalogue listing product information from multiple sellers of media space. Others offer buyers software that helps automate advertising procurement, thereby reducing transaction costs. Yet none of these methods described provides an on-line exchange, which allows members to buy, sell and physically deliver media contents, in accordance with user-defined criteria.
Accordingly, there is a compelling need for the development of such a media exchange, which facilitates real-time demand and supply and pricing for media space, matches buyers and sellers according to defined metrics, and dynamically delivers the traded media contents.